Answer:
a. Cost of Equity is 4.50%
b. Cost of Equity is 15.55%
Explanation:
a.
The formula for price of a stock using the constant growth model of the DDM approach is,
P0 = D0 * (1+g) / r - g
Plugging in the available values,
62 = 0.3 * (1+0.04) / (r - 0.04)
62 * (r - 0.04) = 0.312
62r - 2.48 = 0.312
62r = 0.312 + 2.48
r = 2.792 / 62
r = 0.045 or 4.5%
b.
SML (r) = rRF + β * (rM - rRF)
Plugging in the values,
r = 0.045 + 1.3 * ( 0.13 - 0.045)
r = 0.1555 or 15.55%
1 convenience
2. Specialty
Hope this helps
Answer: is developed after considering possible events.
Explanation:
A contingency plan is a plan made by an organization where they prepare for the worst possible outcome from a current event. A contingency plan is formed after considering various outcomes that can occur and preparing for the worst possible case scenario. A contingency plan helps a company to be prepared for any outcome positive or negative.
Answer:
$3.48
Explanation:
Net income ÷Shares of common stock outstanding + Preferred stock convertible shares of common stock.
Net income 6,800,000
Shares of common stock outstanding 1,200,000
Preferred stock convertible 750,000
Hence:
$6,800,000/ ($1,200,000 + $750,000)
=$6,800,000/$1,950,000
=$3.48
Therefore the diluted earnings per share for 2021 is $3.48
Answer: (C) <u><em>negative; the law of demand</em></u>
Explanation: The law of demand states that at a higher price consumers will demand a lower quantity of a good. i.e. The demand is derived from the law of diminishing marginal utility, which states that the marginal utility of a good or service declines as its available supply increases.
Hence the demand curve is downward sloping.
